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Tuesday, January 29, 2013

The New Institutional Philosophy of Rob Merges

In Justifying Intellectual
Property, Rob Merges has written one of the most sweeping, significant, and brilliant books about intellectual property to be published in years. The importance of the book is only
accentuated by the identity of the author.
Merges is, of course, one of the godfathers of the institutional
economics approach to intellectual property law, so this book conjures up the
image of Richard Posner arguing that contract and tort law
are fundamentally grounded in theories of fairness and distributive
justice. Merges’ book is an ideal
candidate for a book club such as this one because it covers so much ground and
does so with a great deal of nuance and careful detail. This post will only scratch at one corner of
Merges’ masterpiece, and I look forward to reading the perspectives of others
as well. Many thanks to Matt Bodie for
organizing this club and to Prawfsblawg for hosting it.

Justifying Intellectual Property
is a tremendous achievement in large part because it succeeds in adducing a fully
compelling non-economic justification for intellectual property rights. When Merges argues that he can arrive at the
midlevel principles that animate central IP doctrines using Locke, Kant, and
Rawls, he is highly persuasive. The antecedent
question, which I hope to explore, is what has catalyzed this approach. Merges notes throughout the book that for an
economic justification for intellectual property, the evidence is not
there: based on existing empirical
findings, there is at least as much reason to believe that intellectual
property has hampered innovation as that it has advanced it. That is a fair characterization. But note the type of argument being
made. It is not the case, and Merges
correctly does not assert, that IP’s midlevel principles cannot be justified
with economic theory. Such a
justification would not be difficult: nonremoval, proportionality, and
efficiency are core ideas of an economic theory of intellectual property—efficiency,
as Merges notes, might be the foundational principle, with nonremoval and
proportionality two of the crucial midlevel principles. The only principle that is missing from
standard economic accounts is dignity, unless it is thought of in human welfare
terms (which perhaps it should be). But
dignity plays a much smaller role in IP doctrine than the other three midlevel
principles. This is particularly true in
the United States, where artists and creators have fewer moral rights than they
do in European jurisdictions. And it is true
as well for patent law, where one will struggle to locate an important doctrine
that appears to be grounded primarily in a concern for human dignity. When it comes to dignity considerations in
IP, it is not clear how great the need for justification really is.

Nor is it the case that IP doctrine is inconsistent with economic
theory. To be sure, there are some (perhaps
many) doctrines that seem misguided from the position of economic theory. But this will be true for all legal fields,
including those, like antitrust, that are indisputably guided by economic
thinking and economic thinking alone. If
there were not such holes and inconsistencies in the doctrine, there would be
little for legal scholars to write about!
More importantly, if IP’s midlevel principles could be understood equally
well as stemming from economic theory, then any doctrinal failings are
attributable to errors in translating midlevel principles into doctrine, not a
problem with economics as a fundamental IP precept. So the issue is not doctrine, either.

The problem, as Merges correctly describes it, is that IP doctrine, as
implemented by courts and other parties, has failed to advance the economic
aims that it set out. This is an
empirical judgment, and quite possibly a correct one. But what is the comparable standard by which
a deontic conception of IP is to be judged?
What would it mean for IP doctrine in practice not to have properly
advanced Lockean or Kantian ethics? How
could anyone tell? The problem—or, more
accurately, the advantage for Kant and Locke—is that those approaches are purely theoretical and do not generate testable predictions. Economic theory has foundered on a set of
tests that cannot be applied to the alternatives Merges proposes.

Rob Merges is absolutely right that an economic approach to
intellectual property law has failed to deliver on its promise and should be
rethought. To take its place, he has
accomplished something monumental, elevating deontic theory to a sustainable
position as the foundation for intellectual property law. But the terms on which he has lifted Kant and
Locke do not entomb economic theory. In
the end this may be just as well. It
would be a shame if future scholars were to cease reading the terrific
institutional economics articles that Merges wrote earlier in his career.

Posted by Jonathan Masur on January 29, 2013 at 12:53 PM in Books | Permalink

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Comments

Fantastic post! And I too am eager to see what others have to say.

But a question: What now for theorists of a deontic bent? I have no doubt that it'd be impossible to test whether a system built on Kantian or Lockean commitments was working. Or better. Or broadly preferable on the ground. But does that so deeply hamper the approach that we should stick with economic theory even if it fails? Or is it simply a matter of high-level commitments and tolerance for uncertainty?

Again, great post.

Posted by: SparkleMotion | Jan 29, 2013 1:37:54 PM

Just curious: when you refer to "economic theory," what school of thought do you have in mind? Or, who for you, in economics, exemplifies such theory? For instance, what a Philip Mirowski would do with "economic theory" with regard to IP law I believe to be rather different than those of neo-classical bent and certainly not compatible with a "law and economics" or even an "institutional economics" approach to the subject.